Economists Explore Valuable Role of Goods for International Stock Markets


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Scientists at the SUSU School of Economics and Management, together with foreign colleagues, have analyzed the role of various product groups in a traditional stock portfolio. Economists have explored the possibility of hedging and diversifying 21 commodities for 49 international stock markets owned by countries at different stages of economic development. The results of this work will help investors minimize risks when making transactions in the stock markets. They were published in the journal. Resource Policy,


Safe investments during a crisis

Seyd Javad Hussein Shahzad, Senior Researcher, Department of Accounting, Analysis and Audit, Ph.D. in Finance, proposed the idea of ​​research stocks Raw material markets of developing countries to their counterparts from Germany, Lebanon and Vietnam. This analysis is especially relevant for countries whose economies are highly dependent on commodity prices. It is no secret that in crisis situations in the stock market, investors are looking for ways to minimize risks when making transactions – a process called hedging. For example, oil is considered safe for investing in the stock markets of developing countries such as Russia.

“Currently, there is a debate about the role of various types of goods in the traditional stock portfolio, and it has intensified. Similarly, a review of studies on the role of shelter products, hedging and diversification for various stock markets (classified according to their stage of development, as well as their net trading risks.) Is reviewed. This study provides an overview of existing empirical work, emphasizes the heterogeneity of the results and provides comprehensive analysis of these aspects. The results or the study will allow investors to objectively assess the situation in the stock markets of raw materials in developing countries, "explains Dr. Shahzad.

Comprehensive Statistical Analysis

The aim of economists was to prove that not only traditionally oil is a priority investment area, but also other goods. The results of the study cast doubt on the specific roles assigned to a particular product for a particular equity investment. However, many other products, especially other precious and industrial metals, are also safe for investment in many global stock markets.

“The work was mainly focused on the analysis of the side effects of volatility, asset price volatility, during the crisis. I plan to work on the study of the index of relative dependence product Prices to find new ideas for the investment community, "says the economist.

The results are useful for individual investors, institutional investors and politicians concerned about the overall risk to countries that are heavily dependent on oil or other goods for trade purposes. This is especially important for market participants in developed, developing and borderline stock markets which seek not only to hedge assets that can reduce the risk of falling in the stock markets, but also to safe havens that can compensate for the extreme risk of decline in the stock markets (i.e. the risk of decline during periods of stress).


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Additional Information:
Sajid Ali et al. Reviewing the valuable role of goods for international stock markets, Resource Policy (2020). DOI: 10.1016 / j.resourpol.2020.101603

citation:
Economists Explore Valuable Role of Goods for International Stock Markets (2020, March 31)
retrieved April 1, 2020
from https://phys.org/news/2020-03-economists-explore-valuable-roles-commodities.html

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